WWE Announces 3rd Quarter Results: All Things Down

Depreciation and amortization
Depreciation and amortization expense was $3.2 million for the current quarter as compared to $3.6 million in the prior year quarter.

EBITDA
EBITDA was approximately $23.5 million in the current quarter as compared to $18.1 million in the prior year quarter, reflecting a $3.6 million net impact from production tax credits and SG&A cost savings. Excluding the impact of production tax credits, Adjusted EBITDA was approximately $17.4 million in the current quarter as compared to $15.6 million in the prior year quarter.

Investment and Other (Expense) Income
The decline in investment income of $0.2 million in the current quarter reflected lower average investment balances and average interest rates. Other income was $0.9 million, as compared to $0.2 million in the prior year quarter, reflecting realized foreign exchange gains and losses and the revaluation of warrants held in certain licensees. During the quarter, we recorded a $0.3 million gain relating to the revaluation of our warrants as compared to a $0.1 million loss in the prior year quarter.

Effective tax rate
The current quarter effective tax rate was 34% and reflects benefits due to the increased Internal Revenue Code (IRC) Section 199 deduction rate on qualified production activity income and the recognition of previously unrecognized tax benefits. The prior year effective tax rate was 42% and was negatively impacted by differences between our tax returns and our estimated tax provision.

Summary Results for the Nine Months Ended
Total revenues through the nine months ended September 30, 2010 were $355.1 million as compared to $357.9 million in the prior year period. Operating income was $67.8 million as compared to $59.3 million in the prior year period. Net income was $45.3 million, or $0.60 per share, as compared to $39.1 million, or $0.53 per share, in the prior year period. EBITDA was $76.3 million for the current nine month period as compared to $70.3 million in the prior year period. Excluding items that impact comparability, Adjusted Operating income for the current period was $60.1 million as compared $59.0 million in the prior year period. Adjusted Net income was $40.4 million, or $0.54 per share, as compared to $38.7 million, or $0.52 per share, in the prior year period. Adjusted EBITDA was $70.2 million for the current nine month period as compared to $70.0 million in the prior year period.

The following charts reflect net revenues by segment and by geographical region for the nine months ended September 30, 2010 and September 30, 2009. (Dollars in millions)

Revenues from outside North America increased 11% led by our Television and Licensing businesses as well as an approximate $2.8 million favorable impact from foreign exchange rates.

WWE Studios
We recorded revenue of $11.6 million in the current period related to all seven of our film releases, including $3.8 million associated with our latest film, Legendary, as compared to $7.5 million in the prior year period. In September we released our latest film, Legendary, under our revised film strategy. This strategy entails self-distribution and marketing of films. Under this new model, we reflect a film's gross receipts and its associated distribution and advertising costs in our results. In addition, the change in distribution results in earlier recognition of revenue and expenses relative to initial release of the film as compared to our previous model.